A large amount of the debate in Washington centers on both the current budget deficit (~ $1 Trillion/year) and the cumulative debt (~ $16 trillion.) Nobody really wants to talk about the unfunded liabilities of Social Security and Medicare, so we will just ignore those. The sequester is a debate about making relatively small changes in spending versus increased taxes. Related to all of this is the debt ceiling debate which has become a point of contention. Also related is the unemployment rate, which a lot of Federal programs are intended to help soften the pain. None of this is news to METARites.

What you might not have heard about is the increased number of people receiving Social Security Disability. These are people that are under the Social Security Retirement age. The number of people receiving disability has been steadily rising since 1989. It has risen under all presidents of both parties. [1] There are currently 14.1 million people receiving disability. What is important to understand is that these folks are NOT counted in the unemployment figures. They are also not counted in any of the “welfare” statistics.

Recently I have been hearing firsthand about one person’s path to receiving disability. Long story short, the commonly perceived definition of disability is NOT consistent with the definition used to successfully receive benefits. I only knew the intimate details about this one case, until today.

National Public Radio reporter Chana Joffe-Walt spent 6 months learning how the system works in the real world. You can read her report here. [3] If you would like to listen to her report, you can download a podcast of it here. [4]

The report is fairly long and I STRONGLY suggest you read it/listen to it if you are interested. Here are a few brief excerpts that that were news to me. (Don’t worry, I will get to the METAR implications of this later.)

1. Hale County, Alabama has 1 out of 4 working age adults on disability. Most of them were certified by a single medical doctor, Perry Timberlake."We talk about the pain and what it’s like," he says. "I always ask them, 'What grade did you finish?'"

What grade did you finish, of course, is not really a medical question. But Dr. Timberlake believes he needs this information in disability cases because people who have only a high school education aren't going to be able to get a sit-down job.

Dr. Timberlake is making a judgment call that if you have a particular back problem and a college degree, you're not disabled. Without the degree, you are.

The implication is that many of the low paying jobs where you could sit down all day are GONE AND NOT COMING BACK. i.e., these folks will be permanently disabled.

2. But disability has also become a de facto welfare program for people without a lot of education or job skills. But it wasn't supposed to serve this purpose; it's not a retraining program designed to get people back onto their feet. Once people go onto disability, they almost never go back to work. Fewer than 1 percent of those who were on the federal program for disabled workers at the beginning of 2011 have returned to the workforce since then, one economist told me.

People who leave the workforce and go on disability qualify for Medicare, the government health care program that also covers the elderly. They also get disability payments from the government of about $13,000 a year. This isn't great. But if your alternative is a minimum wage job that will pay you at most $15,000 a year, and probably does not include health insurance, disability may be a better option.

3. A person on welfare costs a state money. That same resident on disability doesn't cost the state a cent, because the federal government covers the entire bill for people on disability. So states can save money by shifting people from welfare to disability. And the Public Consulting Group is glad to help.

PCG is a private company that states pay to comb their welfare rolls and move as many people as possible onto disability. "What we're offering is to work to identify those folks who have the highest likelihood of meeting disability criteria," Pat Coakley, who runs PCG's Social Security Advocacy Management team, told me.

There's a reason PCG goes to all this trouble. The company gets paid by the state every time it moves someone off of welfare and onto disability. In recent contract negotiations with Missouri, PCG asked for $2,300 per person. For Missouri, that's a deal -- every time someone goes on disability, it means Missouri no longer has to send them cash payments every month. For the nation as a whole, it means one more person added to the disability rolls.

4. When he started in 1979, Binder represented fewer than 50 clients. Last year, his firm represented 30,000 people. Thirty thousand people who were denied disability appealed with the help of Charles Binder's firm. In one year. Last year, Binder and Binder made $68.7 million in fees for disability cases.

The way Binder tells it, he's is a guy helping desperate people get the support they deserve. He is a cowboy-hatted Lone Ranger going to court to fight the good fight for the everyman.

Who is making the case for the other side? Who is defending the government's decision to deny disability?

Nobody.

"You might imagine a courtroom where on one side there's the claimant and on the other side there's a government attorney who is saying, 'We need to protect the public interest and your client is not sufficiently deserving,'" the economist David Autor says. "Actually, it doesn't work like that. There is no government lawyer on the other side of the room."

Of course all of this relates to the unemployment rate, the state of the Social Security Trust fund, the annual budget deficit, the cumulative debt and the unfunded liability of Social Security.

A while back on METAR, I asked the question: Why do we NOT have people in soup lines like they had in the 1930’s? After reading this article, I have a lot better understanding why. Many of the folks that would have been unemployed are now receiving disability payments. Make no mistake, this is NOT a path to driving the latest Mercedes. Payments are about $13k per year, but you also get Medicare thrown in for free. If these folks were NOT receiving these benefits, it is not clear how they would survive economically.

Yoda is NOT advocating any particular changes or solutions. Yoda is not saying this problem was caused by any particular political party. You could reasonably argue that many of these folks SHOULD be counted as unemployed, even if you continue to pay them disability.

Yoda’s point is that you can NOT solve a problem unless you correctly identify it. Add solving “disability” to the long list of other issues waiting for Washington solutions.

Very significant to the US economy IMO and I strongly recommend you read the article and form your own opinion. Your conclusions might be very different from the excerpts I chose.